Back room Govt cuts could save $230m - report

TRACY WATKINS
Last updated 12:45 13/04/2011

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A new Treasury report says government agencies could save more than $230 million a year from back office functions.

The report, which follows a review of costs across the public service on thigns including property management, human resources, finance and ICT and found that they were higher in New Zealand than international bench marks, Finance Minister Bill English said.

"For example, the average office space per person in our public service is about 21 square metres compared with best practice in some New Zealand agencies of about 15 sq m. This is one of many areas where we believe there is room for improvement."

The report looked at costs across 33 government agencies to set a bench mark for adminsitrative and support functions.

Some of the savings could be achieved through fewer staff but Treasury said it did not know how many jobs that equated to.

But the results have even forced Treasury to look at some of its own costs - such as the cost of its buildings on The Terrace in Wellington, which at a cost of $635 per square metre were among the highest of those agencies surveyed.

Deputy secretary Andrew Kibblewhite said Treasury was looking at whether it could move to cheaper accommodation.

Mr English said the Administrative and Support Services Benchmarking Report showed there was room for further savings that could go towards improving frontline public services.

He expected it to result in some changes.

"In some cases this will be through government initiatives. In other cases, departments will be expected to apply the lessons themselves from other higher performing agencies."

The Government had set up a property management "centre of expertise" based in the Ministry of Social Development.

It would set expectations for departments and monitor their performance, as well as provide a brokerage service to match agencies with spare property with those seeking additional space. it would also investigate shared property related services and support the co-location of agencies.

Officials estimated that better property management across the state sector could eventually save over $50 million a year.

Mr English said the government had already identified $3.8 billion in savings within the public service over the past two years and reprioritised the spending elsewhere. It also expected to save about $115 million over five years by seeking state-sector wide contracts for goods like stationery, office supplies, hardware and vehicles.

A shared services agency in the health sector was expected to save several hundred million dollars over the next few years.

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The survey showed that the 33 government agencies surveyed spent $1.849 billion - or 9.8 per cent of organisational running costs - on administrative and support services last financial year.

It also showed that a smaller group of agencies surveyed the previous year had actually cut adminstrative and support services costs from 11.5 per cent of organisational running costs to 10.4 per cent of those costs - a reduction of $87 million.

The savings it identified included:

* $124 million on information and communications technology

* $43 million on property $33 million on human resources

* $15 million on finance

* $21 million on corporate and executive services.

- Stuff

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